Instructions For 2002 Form Fia-40 - Farm Income Averaging printable pdf download

O R E G O N

INSTRUCTIONS FOR 2002 FORM FIA-40

D E PA R T M E N T

Farm Income Averaging

O F R E V E N U E

You may elect to figure your 2002 tax by averaging, over

• Operating a nursery or sod farm.

the previous three years (base years), all or part of your 2002

• Raising or harvesting of trees bearing fruits, nuts, or other

taxable farm income. Making this election may give you a

crops.

lower tax if your 2002 farm income is high and your taxable

• Raising ornamental trees (but not evergreen trees that are

income for one or more of the three prior years was low.

more than 6 years old when severed from the roots).

• Raising, shearing, feeding, caring for, training, and man-

You will need copies of your original or amended

aging animals.

Oregon income tax returns for tax years 1999, 2000, and

• Leasing land to a tenant engaged in a farming business,

2001. You can obtain copies of prior years’ returns for a fee

but only if the lease payments are based on a share of the

from the Oregon Department of Revenue. See Taxpayer As-

tenant’s production (not a fixed amount).

sistance on page 3 for numbers to call.

• Wages and other compensation you received as a share-

If you filed an Oregon part-year or nonresident return in

holder in an S corporation engaged in a farming business.

any of the three base years, you will need Schedule Z, Com-

A farming business does not include:

putation of Tax, to complete Form FIA-40. If any of the three

base years are part-year or nonresident returns, ignore the

• Contract harvesting of an agricultural or horticultural

computation of tax for the applicable year on Form FIA-40

commodity grown or raised by someone else, or

and complete Schedule Z. Fill in the computed tax from

• Merely buying or reselling plants or animals grown or

Schedule Z on lines 8, 12, or 16, whichever applies.

raised by someone else.

Elected farm income

Line instructions

Your elected farm income is the amount of your taxable

Line 5. If your 1999 taxable income was -0- or less, use the

income from farming that you elect to include on Form FIA-

worksheet below to figure the amount to enter on

40, line 2. This is the amount on federal Schedule J, line 2,

Form FIA-40, line 5.

if you elect to use farm income averaging for federal. Do

1999 Taxable Income Worksheet

not enter more than the amount on line 1.

1. Figure the taxable income from

To figure elected farm income, first figure your taxable

your 1999 tax return without

income from farming. Taxable income from farming includes

limiting it to -0-. If you had a net

all income, gains, losses, and deductions attributable to any

operating loss (NOL) for 1999,

farming business. Gains and losses from the sale or other

do not include any NOL carry-

disposition of property (other than land) must be from prop-

overs or carrybacks to 1999.

erty regularly used for a substantial period of time in your

Enter the result as a positive

farming business. However, it does not include gain from the

amount here ........................................... $ ___________

sale or other disposition of land. You do not have to include

2. If there is a loss on your 1999

all of your taxable income from farming on Form FIA-40,

federal Schedule D, line 18, add

line 2. It may be to your advantage to include less than the

that loss (as a positive amount)

full amount, depending on how the amount you include on

and your 1999 capital loss carry-

line 2 affects your tax bracket for the current and prior three

over to 2000. Subtract from that

tax years.

sum the amount of the loss on your

Your elected farm income cannot exceed your Oregon tax-

1999 federal Schedule D, line 17.

able income. Also, the portion of your elected farm income

Enter the result here ............................. $ ___________

treated as a net capital gain cannot exceed the smaller of

3. If you had an NOL for 1999,

your total net capital gain or your net capital gain attribut-

enter it as a positive amount here.

able to your farming business. If your elected farm income

Otherwise, enter the portion

includes net capital gain, you must allocate an equal por-

(if any) of the NOL carryovers

tion of the net capital gain to each of the base years.

and carrybacks to 1999 that were

If, for any base year, you had a capital loss that resulted in

not used in 1999 and were carried

a capital loss carryover to the next tax year, do not reduce

to tax years after 1999 as a

the elected farm income allocated to that base year by any

positive amount here ............................ $ ___________

part of the carryover.

4. Add lines 2 and 3 .................................. $ ___________

5. Subtract line 4 from line 1.

Farming business

Enter the result here, and as

A farming business is the trade or business of cultivating

a negative amount on

land or raising or harvesting any agricultural or horticul-

Form FIA-40, line 5 ............................... $ ___________

tural commodity. This includes:

Instructions For 2002 Form Fia-40 - Farm Income Averaging

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